Update on enrollment and finance

Dear Faculty and Staff Colleagues,

I want to begin by thanking each of you for contributing to a strong start to the fall semester. Your creativity and dedication are especially admirable at a time of personal and professional uncertainty for everyone. I hope that in the midst of long and overly busy days, you can feel buoyed by the knowledge that you are making a bigger difference than ever in the lives of our students.

As we look at the experience of some other colleges and universities nationwide, I believe we can feel proud of our resolution in making the decision to go remote when we did. The actions we took in late spring, outlined in my messages of April 6 and May 28, were painful for the community. However, they put us in a position to be able to move more quickly than many colleges in making the difficult choice in late July to offer only remote instruction and to drastically limit the student population on campus. Because we had already projected and planned for the significant loss of revenue these decisions entailed, we were able to prioritize the health and safety of the community, and the continuity of the educational experience.  

As a result, while many colleges and universities have made last-minute switches to remote instruction, or sent students home after a failed attempt to open in person, we have had a smooth start to the semester and are in an enviably stable position going forward. 

Where do things stand now? As I will outline below, with fall enrollment numbers finalized, and even with the spring still very uncertain, we find ourselves in a better position financially than we anticipated. 

To be clear, however, that does not mean that we are out of the woods financially. It simply means a shift in outlook from what I would in May have called “catastrophic” to something closer to “perilous.”

As you know, our primary source of revenue is tuition, room, and board fees, so enrollment numbers drive the overall budget. In the spring, we projected a total enrollment of 2,703. Our current enrollment is 2,484, a decline of 8.1 percent. The largest proportion of that is a decline of 15.2 percent in the Class of 2024, which has dropped from 715 to 606. The majority of these students have deferred, some for a semester, some for a year. In the three upper classes, a total of 151 students have taken a leave of absence or in some cases transferred.  

In our earliest budget projections in May, we had anticipated a fall enrollment drop of 15 percent and 25 percent drop in spring, with a resulting budget deficit of $58.4 million. We believe that the stronger enrollment outcome we achieved for fall reflects both the decision to freeze tuition and fees and offer a 10 percent reduction to students studying from home, and the extra outreach efforts by many faculty that helped students stay connected throughout the summer. We are now revising our spring enrollment projections upward as well. That said, spring enrollment could vary dramatically depending on the course of the virus over the winter months. We are currently developing budget scenarios for the spring semester that include a version with most students on campus, a version with a substantially greater number of students on campus than the 650 who are here now,  and a version of spring that looks much like the fall. 

In addition, we had budgeted $8 million for COVID-related expenditures such as testing, monitoring, protective equipment, cleaning, and additional quarantine space. With a limited population on campus, those expenses have been lower. Depending on how we operate for the spring semester, we now hope these direct COVID mitigation costs could drop to $5 million over the course of the year

In light of what we see so far, we have revised our budget projections to reflect a deficit of between $32.9 million to $42.2 million. Compared to $58.4 million this is a definite improvement. By any other measure, such losses are staggering in an annual operating budget of approximately $226.2 million. We have never in my time here had an operating budget shortfall that could not be covered by routine budget reallocation and our $2 million contingency fund. We end most years with a slight surplus.

What does our current financial situation mean for future decisions on staffing or compensation?  

At a recent meeting of administrative staff, I was asked whether we are contemplating any additional furloughs. I will repeat what I said there: We are not currently planning furloughs, but we can’t rule them out. With the significant changes that have taken place in the work being performed in a remote environment, we may wish to temporarily realign some staff resources. We continue nevertheless to hold the long-term preservation of jobs as a high priority.

We recognize that the relatively improved financial outlook casts new light on the compensation reductions developed in May and implemented July 1. I know that my expressions of appreciation for your hard work would feel more meaningful if we were able to offer you the level of compensation that you all deserve.

As I have said previously, we will now review these reductions in light of current projections in order to determine whether it may be possible to restore some compensation prior to the end of the fiscal year. The Faculty Academic Policy Committee (FAP) has begun discussion of this issue with the administration, focusing on the issue of the overall proportionality of the $9.4 million worth of compensation reductions within the context of the overall deficit, and relative to an expected contribution from the endowment. This discussion will involve the Board of Trustees as well as the administration and FAP, as we seek to appropriately balance the sacrifices of the present with the constraints of the future.

It is important to stress that the unknowns of this situation still outnumber the knowns. This is not a one-year budget crisis. The progress of COVID-19 over the course of the winter, and the impact of the flu season, are hard to predict. There is of course the possibility, if not likelihood, that the impact of the disease could be felt through 2021-22 as well. Apart from the effect on operations, the effect of this disruption on long-term student enrollment patterns is an open question. The strong pushback on cost, the sudden perception of negotiability of aid and price, the partial “unbundling” of the residential model, the increased distrust in colleges and universities created by the perceived mismanagement of this crisis—all of these could contribute to significant changes in the higher ed landscape.

As we work to address the multi-year impact of this crisis on the College’s finances, we will also want to begin thinking about the long-term future of Lafayette. We will continue our commitment to becoming more affordable and distinctive, as bringing the best students will continue to be central to the College’s success. But how we will achieve greater affordability and inclusivity, and what will make us truly distinctive in the future, may look different from what we imagined. Over the course of the fall we will begin to lay the groundwork for discussion of these issues, and we look forward to engaging the entire community.

Thank you again for your dedicated work on behalf of the College. Everything you do to help us succeed in this difficult moment is an investment in a strong future for Lafayette. I am very grateful for your support.

Alison